EMBARGO 6 p. m. PM 97/ 1968
9/ 12/ 68 COVE BAUXITE/ ALUMINA PROJECT
STATEMENT BY PRIME MINISTER
M JG-GRTON
The Government has given approval in principle
for a proposal to enable the doubling of the previously
planned size of the Gove bauxite/ alumina project.
It has also agreed that Australian participation
in the enlarged project will initially be 30% which
represents an Australian investment, in terms of money,
nearly twice as large as that previously contemplated.
The original proposal was for the construction
of an alumina plant with a capacity of half a million tons
a year at a cost, including ancillary services, of $ 100
million. Under the terms of the agreement between the
Commonwealth and Nabalco Pty. Ltd., announced on
September 1965 50% of the capital of Nabalco was to be held
by Australian interests and 50% by Swiss Aluminium Ltd.
The agreement provided, however, that Australian
interests were not bound to supply 50% of the capital unless
a profit of 7-1/ 2% per year on the whole of the equity capital
of the Company could be seen to be available for a period
of twenty years. If this profit could not be seen to be anticipated
the Australian interests could withdraw in which case Swiss
Aluminium Ltd was committed to go ahead alone and if
Australian capital was not available had the right to
go ahead alone. Subsequently a comprehensive feasibility
study showed that the economics of an alumina plant with
a capacity of half a million tons a year were such that
continued Australian participation was out of the question
because of the low return on capital which was expected.
The prospective return on capital of an alumina
plant with a capacity of one million tons per annum, which
is now proposed, costing $ 300 million was also not nearly
high enough to assure continued participation by Australian
capital. -/ 2
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However, Swiss Aluminium Ltd. knew that the
Government placed great importance on Australian
participation in this venture and willingly co-operated
in helping to overcome the difficulty presented to the
Australian interests concerned because of the higher
capital investment required, and the lower profitability
disclosed by the feasibility study.
In the result it is proposed that Australian
interests will provide 30% of the capital required for
a joint venture. Under the terms of the arrangement Australian
interests will own their share of the alumina produced.
Swiss Aluminium Limited will buy this alumina for twenty
years at prices which have been agreed, should the
Australian interests require this, but the Australian
interests can make their own arrangements for sale of
the alumina elsewhere should they wish to do so.
Further, Swiss Aluminium Ltd. have agreed that
the Australian interests have the right to export up to
million tons of bauxite over a 20 year period, the profits
from the sale of which are to go exclusively to the
Australian interests concerned.
In the future either the Swiss, or the Australian
venturers may undertake an expansion of the plant to
give it a capacity of more than one million tons per year
and should that occur the other venturer has the right
to subscribe 50% of the additional funds required and to
take 50% of the additional production.
In accordance with the terms of the original
agreement the perimeter areas will now be included in
the joint venturers' lease.
The Swiss Company has been told that should future
circumstances permit a return to the original concept of
overall Australian participation on terms fair to all
concerned the Government would look to the Swiss Company
to co-operate in bringing this about.
Under the approved arrangements the joint venturers
will continue to be responsible for the construction of
all associated facilities other than those needed for
direct Government purposes such as the police station,
court house, school, hospital, Government offices, and
accommodation for Government employees. Special attention
has been given to measures designed to ensure that the
interests of the Aboriginal people in the area are given
full weight, and to enable them to take the fullest advantage 3/.
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of the opportunities opened to them by the development.
When the plant reaches full production upwards of $ 850,000
a year will be payable to the Aborigines Benefit Trust
Fund from royalties. In all the circumstances the Government believes
the national interest has been served by acceptance of
these proposals. The alumina plant will be one of the largest in the
world. A township of more than 4,000 people will be constructed
in the sparsely populated North, and a framework has been
provided in which Australian interests have a substantial
share in a very large undertaking and also retain good prospects
for future expansion of the percentage of that Australian interest.
Canberra 9 December 1968.